Inauguration Week: 3 Market Signals to Watch
From Uncertainty to Enthusiasm? Gauging Market Sentiment During the Inauguration of an Expected Pro-Business Administration
Navigating the market during a presidential transition requires a nuanced approach. While the promise of deregulation under a new administration can fuel optimism, the presence of tariffs and geopolitical events creates a countercurrent. Rather than getting caught up in the daily news cycle or relying on preconceived beliefs, it's essential to track concrete market indicators.
This week, we'll explore three such indicators to understand how the market is processing this interplay of deregulation, tariffs and geopolitical events.
This publication consistently analyzes 22 charts weekly, covering stock indexes, commodities, crypto, and contextual market data. This holistic approach based on indicators only, has objectively anticipated market reversals in April 2024 (bearish), May 2024 (bullish), July 2024 (bearish), August 2024 (bullish), and December 2024 (bearish), as well as bullish continuations in September 2024, despite widespread pullback concerns that month. All the publications are in the Weekly Compass library, in: https://smartreversals.substack.com.
Providing weekly targets has proven valuable for premium subscribers. For example, last week's analysis projected bearish targets of $240 (SMH), $212 (IWM), $20,476 (NDX), and $411 (MSFT). It also noted the possibility of a weekly reversal candle due to bearish exhaustion setups. Corresponding bullish targets of $258 (SMH), $224 (IWM), $21,461 (NDX), and $430 (MSFT). See the actual price action from the past week in the 4-hour charts. The accuracy is impressive, and the levels are published ahead of price action.
The blue line (key or central level) represents the validator level, also provided for each security. Given the utility of these S/R levels, even more are published every Friday, expanding coverage to 35 securities, including NFLX, AMD, MSTR, and leveraged/inverse ETFs like TQQQ, SQQQ, UDOW, SDOW, and more.
If you invest or trade in some of the following securities, SmartReversal’s publications are for you: SPX NDX DJI ES=F NQ=F SPY QQQ IWM DIA SMH TLT TQQQ SQQQ UPRO SPXS UDOW SDOW URTY SRTY NVDA META MSFT AMZN GOOG AAPL TSLA NFLX COST MSTR PLTR AMD GLD SLV BITCOIN ETHEREUM.
Let’s begin:
IWM
Setup: Cautiously Bullish
Considering: The candle found resistance at the 20MA, which coincides with the monthly level of $226. This is a key level to watch. While a pullback is possible, these types of bullish candles often lead to further upside. Supporting this potential continuation, price has bounced from the 40MA, a support line that also proved effective in August and September, and the stochastic oscillator is curling up near overbought territory. That said, why a possible pullback? It is not because of the resistance levels mentioned, it’s more because of the gap at $220 on the daily chart. A similar gap in November preceded a pullback the following week before further upside.
Immediate target for bullish continuation: $230.3 - a rejection is expected there unless price opens in the red on Tuesday before any continuation.
Bearish validation if price falls below this key level: $222.1
Potential bearish destination if the key level is lost: $217.3
A solid recovery of the 20MA (reaching $230 without retrace) could imply a quarterly target of $249. Remember that moves between annual levels do not happen in a straight line.
SMH
Setup: Bullish
Considering: Weekly candle with good internals (there are no relevant gaps in the daily), oscillator is curling up and the bullish thesis has been studied during several weeks considering the price consolidation (volume at price) above the 20MA. The weak point of the chart is the low volume, so as usual, managing risk is key in a bullish setup with 80% possibilities of continuation.
Immediate target for bullish continuation: $264.4
Bullish invalidation if price breaks below this key level: $252.5
Immediate target for bearish continuation if the key level is breached: $246.3
These two charts for IWM and SMH provide references of what is below the paywall for SPX, NDX, DJI, TSLA, Palantir, Bitcoin, NVDA, MSFT, AAPL, AMZN, META, GLD, SLV and many more, you can do 2 things if interested: 1) Upgrade your subscription to continue reading, and/or 2) Go to the top of this email and like in the heart symbol, even from your email Substack captures your reaction. with a good number of likes I’ll keep these two charts open for the next publication.
SPX